G.R. No. 161745 , September 30, 2005
LEA MER INDUSTRIES, INC., Petitioner, vs. MALAYAN INSURANCE CO., INC., Respondent.

FACTS

Ilian Silica Mining contracted petitioner Lea Mer Industries, Inc., a common carrier, to ship 900 metric tons of silica sand valued at ₱565,000 from Palawan to Manila, consigned to Vulcan Industrial and Mining Corporation. On October 25, 1991, the cargo was loaded onto the barge Judy VII, leased by Lea Mer. During the voyage, the vessel sank, resulting in the total loss of the cargo. Respondent Malayan Insurance Co., Inc., as insurer, paid Vulcan the value of the lost cargo and, exercising its right of subrogation, demanded reimbursement from Lea Mer. Upon Lea Mer’s refusal, Malayan filed a collection complaint. The Regional Trial Court (RTC) dismissed the complaint, ruling the loss was due to a fortuitous event—specifically, bad weather from Typhoon Trining—and that the carrier had no advance knowledge of the typhoon and had received clearance from the Philippine Coast Guard. The Court of Appeals (CA) reversed the RTC, finding the vessel was unseaworthy when it sailed, thus the loss was due to petitioner’s fault, not a fortuitous event.

ISSUE

The main issues are: (1) Whether petitioner, as a common carrier, is liable for the loss of the cargo; and (2) Whether the survey report of Jesus Cortez, which concluded the vessel was unseaworthy, is admissible in evidence.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CA decision, holding petitioner liable.
1. On Liability for Loss of Cargo: Petitioner is a common carrier engaged in public service for compensation. The contract was one of affreightment, not a demise charter, as petitioner’s crew manned and controlled the vessel; thus, the law on common carriers applies. Common carriers are bound to observe extraordinary diligence in the vigilance over goods transported. The law presumes they are at fault or negligent for any loss or damage. This presumption can only be overcome by proof that they observed extraordinary diligence or that the loss was due to: (a) a natural disaster, (b) act of a public enemy, (c) act or omission of the shipper, (d) character of the goods or packing defects, or (e) order of a competent public authority. Petitioner claimed the loss was due to a fortuitous event (Typhoon Trining). For a fortuitous event to exempt a carrier, it must be the proximate and only cause of the loss, and the carrier must have exercised due diligence to prevent or minimize the loss. The Court found petitioner’s evidence insufficient to prove this defense. Evidence indicated the vessel was unseaworthy at the time of sailing due to its poor condition (e.g., an ill-maintained and inoperative pump), which contributed to the sinking. Since the loss was not solely due to a fortuitous event but also to the vessel’s unseaworthiness—a circumstance within petitioner’s control—it failed to rebut the presumption of negligence.
2. On Admissibility of the Survey Report: The survey report of Jesus Cortez was properly admitted as a documentary evidence offered by respondent. While Cortez was not presented as a witness (having migrated abroad), the report was identified and testified to by respondent’s witness, Federico S. Manlapig. The report’s contents, which indicated the vessel’s unseaworthy condition, were not offered to prove the truth of such facts but merely to establish that such a report was made. The RTC itself had admitted the document as part of respondent’s formal offer of evidence. The rules on evidence do not require the author of a document to be presented for its admissibility; it is the offer of the document itself that is crucial.